Today, the U.S. Department of the Treasury's
Financial Crimes Enforcement Network (FinCEN) and the
Federal Reserve Board issued amendments to the two funds
transmittal (wire transfer) rules that were published in
January 1995 and extended the effective date of the
rules, as amended, to May 28, 1996.

The rules and the amendments were issued under the
Bank Secrecy Act (BSA) which is a key component of
Treasury's counter-money laundering efforts. The BSA is
administered by FinCEN.

The first rule, issued jointly by Treasury and the
Federal Reserve Board, requires banks and non-bank
financial institutions to collect and retain information
about transmittals of funds in the amount of $3,000 or
more; it also requires the verification of the identity
of non-account holders that are parties to such
transmittals of funds. The second rule (known as the
travel rule), issued by Treasury alone, requires each
financial institution that participates in a wire
transfer to pass along certain information about the
transfer to any other financial institution that
participates in the transmittal.

The amendments to the two rules were made in response
to the financial services industry's request for
clarification and to reduce the compliance burden on
financial institutions.

Electronic wire transfer systems move funds between
financial institutions and handle a daily volume in
excess of 500,000 transactions, moving more than $2
trillion around the world each day. Wire transfers offer
criminal organizations an easy, efficient and secure
method of transferring huge sums of money over a very
short period of time. "Because wire transfer
messages are often sent through several banks and wire
transfer systems, money launderers have been able to
easily confuse the money trail, making it difficult for
law enforcement to trace the criminal proceeds,"
according to Stanley E. Morris, FinCEN's Director.

The wire transfer rules are designed to help law
enforcement agencies detect and investigate money
laundering and other financial crimes by preserving an
information trail about persons sending and receiving
funds through wire transfer systems.

In August 1993, FinCEN issued proposed wire transfer
rules, and asked for and received extensive comments from
the financial services industry. Those comments were
incorporated into the final rules which were issued in
January 1995.

After the rules were published last year, the
industry requested clarification about the meaning of
certain terms in the rules that did not have identical
meanings to the same terms used in the Uniform Commercial
Code (UCC). (The UCC governs many aspects of commercial
transactions.) As a result of working closely with the
financial services industry, FinCEN and the Board
proposed amendments to the rules which change the
definitions in the two rules to correspond exactly to
those in the UCC.

In addition, the industry identified an additional
compliance issue under the travel rule for Fedwire
transfers. (Operated by the Federal Reserve System,
Fedwire is the nation's primary domestic electronic funds
transfer system. It handles both the message traffic
initiating financial transactions among banks and their
customers and the actual movement of funds.) The current
Fedwire format does not provide for adequate space to
record certain originator information as required by the
travel rule. In order to comply with the original travel
rule, financial institutions would have had to incur
substantial costs to create an interim system to
accommodate the required information. (On January 1,
1998, when all banks will have adopted the new, expanded
Fedwire format, full compliance with the travel rule will
no longer be a problem.)

FinCEN has addressed this additional concern by
amending the final travel rule to include a "safe
harbor" provision. For transmittals of funds prior
to January 1, 1998, financial institutions will be
considered in compliance with the travel rule provided
they cooperate with one another in reconstructing and
providing manually, as necessary, all information
otherwise required to be forwarded electronically, in
response to formal requests from law enforcement and
regulatory authorities.

"These amendments clearly reflect Treasury's
ongoing commitment to work together with its partners, to
listen to their concerns and to resolve these issues in
the best interests of all parties," said Director
Morris. "We will follow the experience of law
enforcement in obtaining information about wire transfers
as well as the experience of the financial services
industry in complying with the rules' requirements.
Depending upon our findings, there may or may not be a
need to make further adjustments to the rules."

The rules were sent to the Federal Register today and
will be published in accordance with the Register's
schedule.